re: China and rule of law

Charles-

The rule of law I’m referring to relates to the ordinary conduct of business, not the “managing the population” (concentration camps, etc) and other issues of social control.

As a foreign business, apparently you can’t even register your well-known trademark in China without running into difficulty – while local competitors have no such problem. That’s the missing rule of law I’m talking about.

If the Chinese government continues to provide all these crutches to “fragile local business” (which, in reality, are just local business who pay the most to the bureaucracy to get their way), they’ll end up the worse for it over time. Taking the long view, corruption provides a subsidy for the already-rich, in the same way that very low rates provide a subsidy for the current market leader in each sector.

Of course we also see this in the US – a corrupt Congress passes rules that harm new companies in favor of the big guys already in place, but in China, it appears to be much worse – or maybe its just much more visible.

My point was, if our actions ended up fixing this for them, through this trade deal, it would greatly help their competitiveness. Are we sure we want this to happen?

If we project ahead to a long term competition with another nation – would you prefer that nation to be corrupt and thus inefficient (where the already-rich-fat-and-powerful can buy off any sort of innovative pressure that threatens their sinecures), or a terrifyingly efficient and competitive nation where only the tough and smart survive?

Arguably, the reason we won against the Soviet Union is because of its endemic corruption and limits of central planning, which doomed them to under-performance and eventual loss.